The struggling airline Flybe has secured a rescue deal with its investors and the government, with the UK’s Business Secretary of State for Business, Energy and Industrial Strategy Andrea Leadsom confirming the government deal on Tuesday 14 January.

Earlier in the week the future for the regional airline seemed uncertain with reports suggesting the airline was facing collapse.

Early reports suggest shareholders will provide more funding for the airline, while the government has agreed to defer the level of Air Passenger Duty (APD) paid by the regional carrier in order to stimulate demand.

The UK’s APD (levied against each adult passenger on every flight departing from the UK – excluding Northern Ireland and the Scottish Highlands) is the highest in the EU, at £13 per person on short-haul flights.

Confirming the agreement, Flybe tweeted: “We are delighted with the support received from the Government and the positive outcome for our people, our customers and the UK. Flybe remains committed to providing exceptional air connectivity for the UK regions with the full support of its shareholders.”

As a result of the discussions, Flybe confirmed they will continue to operate as normal, preserving flights to airports such as Southampton, Belfast and Birmingham.

“Flybe is made up of an incredible team of people, serving millions of loyal customers who rely on the vital regional connectivity that we provide,” commented Flybe CEO Mark Anderson. “This is a positive outcome for the UK and will allow us to focus on delivering for our customers and planning for the future.”

Last year the carrier was brought by Connect Airways, a consortium including Virgin Atlantic, which announced Flybe would be rebranded under the name ‘Virgin Connect’ in 2020.

The Chairman of Connect Airways, Lucian Farrell said: “We are very encouraged with recent developments, especially the Government’s recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity. As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside Government initiatives.”

Commenting on the announcement, Business Secretary Andrea Leadsom said: “I am delighted that we have managed to reach an agreement with Flybe shareholders to keep the company in operation, ensuring that regions across the country can continue to be connected.

“This will be welcome news for Flybe, their customers and dedicated employees, as well as those in the supply chain. We will continue to work with Flybe and regional operators to find a sustainable long term future.”

The government announced the Treasury would be reviewing Air Passenger Duty to ensure regional connectivity is strengthened while meeting the UK’s climate change commitments.

Transport Secretary Grant Shapps added: “The Department for Transport will undertake an urgent review into how we can level up the country by strengthening regional connectivity and will look at all the options that we have to make sure our airports can continue to play an important role in driving economic growth, creating jobs and greening aviation, across the country.”

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